The Mozambique tuna bond scandal carries lessons for South Africa, not least of all that it can be very tricky to nail the culprits in major corruption scandals. As the Boustani matter underscores, the masterminds can be highly skilful at keeping their hands clean. Bankers are in deep trouble for handling ill-gotten gains but for technical legal reasons a slippery co-beneficiary is being let off the hook. In South Africa’s state capture scandal, it has been common for wives, girlfriends, children and friends to do the dirty work while politicians including former president Jacob Zuma have used their influence to pull the required strings in exchange for financial benefits. – Jackie Cameron
By Thulasizwe Sithole
It was billed as a trial that would extend the long arm of US justice to one of the biggest corruption cases in Africa this decade – the $2bn Mozambique “tuna bond” scandal, reports the Financial Times.
“Over six weeks in a Brooklyn court, US prosecutors argued that Jean Boustani, a lieutenant of Iskandar Safa, the French-Lebanese shipbuilding magnate, was a “mastermind” behind a scheme to siphon $200m of kickbacks from the loans,” it says.
Alongside others Mr Boustani “stole from one of the poorest nations on earth and gave to the rich,” paying off officials so they would buy “wildly overvalued” boats and maritime surveillance projects from Mr Safa’s company, Abu Dhabi-based shipbuilder Privinvest, the US said.
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“The loans, issued from 2013, plunged the southern African nation into defaults from which it is only now emerging. Yet on Monday Mr Boustani walked free — acquitted on all counts of fraud and money laundering by the jury, even after a trio of former Credit Suisse bankers who had arranged the loans pleaded guilty to handling kickbacks.
Also read: Swiss banker spills beans on $2bn Tuna Bond scandal – The Wall Street Journal
“Mr Boustani denied all the charges. The three bankers — Andrew Pearse and Surjan Singh, who both testified against Mr Boustani, and Detelina Subeva — are due to be sentenced. Credit Suisse, which was not charged, has said the trio went rogue. They could face years in jail. Nowhere in the evidence did you hear about some agreement between Mr Boustani and others to use the wires in order to advance a fraud against investors. That’s just not here.”
The FT’s correspondent, Joseph Cotterill points out that the fact Mr Boustani is not joining them shows how US prosecutors will not always be successful in trying to link alleged overseas bribes to the US financial system where they have jurisdiction.
“Prosecutors documented payments by Privinvest to the Mozambican political elite. Mr Boustani admitted the payments but said they were investments or political contributions, not bribes to secure deals. As he is not a US citizen Mr Boustani was not charged with conspiring to violate the Foreign Corrupt Practices Act, the main US law against bribery of overseas officials.
“Nor did the bankers’ guilty pleas admit to violating it. Instead, the trial focused on trying to prove whether Mr Boustani had been involved in handling bribes that passed in and out of the US financial system.”
Lawyers, reports the FT, refer to these “gossamer threads” that can subject alleged foreign financial wrongdoing to US oversight. However, prosecutors found it difficult to place Mr Boustani, a Lebanese national who never met US investors in the Mozambique loans, among this financial plumbing.
Privinvest is reported as saying that Mr Boustani’s acquittal shows “there was absolutely no wrongdoing with respect to the Mozambique maritime projects”. It has defended the valuations of the boats and kit it sold to the country.
Neither the company nor Mr Safa were charged by the US, continues the FT. With his brother Akram, Mr Safa founded an empire of shipyards that now spans Europe and the Middle East, it notes.
“He is also influential in France, where he bought his first shipyard in 1991 and has pledged to support the rebuilding of the Notre-Dame cathedral in Paris with marble from his own personal quarry. Mr Pearse, who went on to work for a Privinvest-owned group after departing Credit Suisse and said that he took $45m of kickbacks to rig the Mozambique loans, accused Mr Safa of knowing about bribes,” says the FT.
Mr Safa has reportedly said that the claim is “entirely unfounded” and that Mr Pearse had been pressured by the US.
Mr Boustani, according to the FT, said in his own testimony that “neither Iskandar Safa, Akram Safa or Privinvest or myself offered a penny in exchange of securing a project”. Privinvest was “building relationships, influence, lobbying,” he added.
“The company cultivated ties at the top of Mozambique’s governing Frelimo party, including with Armando Guebuza, the former president, and his successor Filipe Nyusi, who received $1m for campaigning. As Mr Nyusi ascended to the presidency in 2014, Mr Guebuza’s clout ebbed in the ruling party,” says the pink paper.
